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Filed under: Deals, Industry, General Electric (GE), Boeing Co (BA), Politics, Northrop Grumman (NOC)

Despite the hue and cry that American interests were injured when the U.S. military gave its new tanker order to Northrup Grumman Corp. (NYSE: NOC) and EADS, the parent of Boeing Co. (NYSE: BA) rival Airbus, one massive company based in Connecticut did very well. That would be General Electric Co. (NYSE: GE).

According to the Business Courier, “the planes will be powered by GE’s CF6 jet engines.” Due to the massive number of planes involved, GE will build 400 engines and bring in about $5 billion.

The news adds to the economic complexity surrounding the politics of the contract. A number of congressmen believe that a company based in France, EADS, should not be building planes for the U.S. military. Picking Boeing, based in Chicago, would have been a more patriotic decision.

But, the math may not be all that easy. Northrop Grumman is clearly a U.S. company, and GE is getting a massive contract. There is no saying that Boeing might not have used Rolls Royce engines and other significant components from other countries.

The military award might be better for U.S industrial interests than most people think

Douglas A. McIntyre is an editor at 247wallst.com

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Filed under: Deals, Berkshire Hathaway (BRK.A)

To borrow a phrase my high school Latin instructor (whom I completely loathed) used to toss around, “Even Homer nods.” That stated, it’s rare that an executive will write openly and with a touch of humor about the worst acquisition of his career. Then again, Warren Buffett is a rare executive.

In his latest letter to shareholders (PDF file — may take a while to load) of Berkshire Hathaway (NYSE: BRK.A), Buffet wrote about his 1993 purchase of the Dexter Shoe Co.

Finally, I made an even worse mistake when I said “yes” to Dexter, a shoe business I purchased in 1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business — one now valued at $220 billion — to purchase a worthless business. To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future — you can bet on that. A line from Bobby Bare’s country song explains what too often happens with acquisitions: “I’ve never gone to bed with an hideous woman, but I’ve sure woke up with a few.”

Coming from one of a handful of companies — compared to the number that have tried — to have built a strong business through acquisitions, Warren Buffett’s thoughts on acquisitions are priceless.

His comments that he compounded the mistake by financing it with shares of his stock — now worth $3 billion — presents an often-overlooked side to acquisitions.

When a company announces a stock-funded acquisition with great fanfare, I get worried. Doesn’t that mean that the company’s management think the target company is a superior investment than their own company? If it isn’t, why trade a stake in their company for it?

Oh, I know — synergy and strategic acquisitions. Hah!

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